Why Apple TV Fails and What Apple Can Do About It

One of the biggest announcement today was the new Apple TV. The giant is continuing it’s model of making their devices smaller, thinner, and more colorful(I call it the  iPod model). However, this device is not portable and although it looks “cooler” it is by no means any more functional or useful. The reception is lackluster just like when the original Apple TV was announced.

The iPod model doesn’t work for TV smart boxes. When the iPod came around it was a complete replacement for your music device. No one used CDs anymore, or record players at least for the most part. This is why this device is no game changer. I still have my blu-ray player because it isn’t the same quality, and I still have my cable because it isn’t the same breadth of content. It doesn’t win.

What can Apple do about it? I think the real innovation is not in the device, it’s in the pricing model. I wont purchase a show on Apple TV every day unless I missed one and really wanted to watch it. How can you get people to purchase couple of shows every day? By abstracting the purchasing decision. What Apple needs is a subscription model for TV content. This way they replace your cable, and they truly own your TV. This removes the user from the penny gap, the decision to watch something becomes unconscious.

How do you sell something like this? I think it is easy. Comcast charges you at least $100/month with 90% of the content you do not watch. Apple can charge $60  and  it’s exactly what you want to see and when you want to see it. $60 dollars buys you 60 episodes — that’s 2 a day. Some people will watch less(big profit), and some more(small profit), but the margins would be significantly more than what Apple would be making just selling the device.

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